Suppose the expected price level increases. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?
The short run aggregate supply curve shifts to the left
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The smaller the reserve ratio the:
A. less money is created in the economy. B. greater the money is created in the economy. C. smaller is the money multiplier. D. less a bank can loan out.
The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. Producing and consuming the efficient quantity of coffee in Kaffenia means that
A) the marginal social cost of the last pound of coffee is at the lowest possible value. B) the marginal social benefit of the last pound of coffee is at its highest possible value. C) to produce more coffee, the marginal social benefit of an additional pound of coffee is less than its marginal social cost. D) All of the above are correct.
If fluctuations in economic activity come from the supply side, higher inflation is associated with
a. lower interest rates. b. structural deficits. c. higher rates of unemployment. d. lower rates of unemployment.
XYZ Inc. announces plans to finance the expansion of the firm by issuing hundreds of millions of dollars of bonds. Discuss how the current stockholders of XYZ Inc. will feel about this plan.
What will be an ideal response?